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TMI Blog2013 (11) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... nal appeal as a valid appeal. 2. The learned CIT(A) has further erred in law in holding that since the assessment order was revised by the Hon'ble CIT-III, Ahmedabad vide order u/s.264 dated 22/01/2002, appeal against that order does not lie before the CIT(A). In view of decision of Hon'ble ITAT, Mumbai Bench cited supra, since the original appeal is a valid appeal, the order u/s.264 of the Act passed by the ld. CIT-III subsequent to decision of the said appeal on technical grounds, in respect of the same issues which were subject matter of the appeal, the order u/s. 264 of the Act ought to have been treated as invalid and without jurisdiction since the CIT(A)'s order cannot be held to have merged with the said order u/s.264 of the Act. 3. The learned CIT(A) has erred in not deciding the ground of appeal disputing the action of the AO in treating NTC's/societies as benami of the appellant company and assessing their income at Rs. Nil subject to adjustment u/s. 154. 4. The learned CIT(A) has erred in not deciding the ground of appeal disputing the addition of Rs. 6,87,000/- made by the AO on account of income receivable from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those orders alongwith the corresponding products/schemes. It was seen that the assessee Company had itself floated various NTCs/societies in the name of its friends, relatives or its employees etc. funds were arranged by the assessee Company for the purchase of land by the NTCs/societies. The construction of the schemes, books of accounts and finance alongwith the day-to-day control was also exercised by the assessee company. Even, the Directors of the assessee Company themselves had made foreign travelling to Egypt, Rome and Ethens for the purpose of making the replica of the monuments construction in the Prarthana Upran Scheme. It was further noted that the activities of the NTCs/societies were not based on the concept of mutuality and they were engaged in the business for profitable purpose and therefore, their incomes were not exempt from Income Tax. In view of these facts, it was held that the NTCs/societies were benamdar of the assessee Company and their incomes had to be determined and brought to tax on substantive basis in the case of the assessee company without prejudice to the decision being taken in the case of the societies themselves. During the current year also, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sked to explain as to why no remuneration had been received from the project "Elegance" this year. The ld. A.O. raised the query vide letter dated 17.02.1999, which was replied by the appellant and also considered by the A.O. The appellant claimed before the A.O. that the cost of the project was more than the booking amount. The appellant had carried out the construction activity, but no remuneration had been shown during the year, which was contradictory with Accounting Policy. Therefore, the A.O. rejected the book result u/s. 145 of the IT Act. He calculated the profit @ 15% on construction cost of the case of Elegance and added to the income of the assessee Company, which was worked out at Rs. 6,87,000/-. In this case, the following additions made by the A.O.: i. Disallowance of consultancy charges Rs. 1,40,000/- ii. Disallowance of legal and professional fees Rs. 5,26,415/- iii. Disallowance out of depreciation Rs. 59,912/- iv. Disallowance out of Compensation paid Rs. 4,43,423/- v. Disallowance out of Entertainment Expenses Rs. 58,035/- vi. Disallowance out of hire charges Rs. 3,50,943/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t due taxes as per the provision of section 140A were not paid. Further, as per the provision of Section 264(4)(C) of the Act if the assessment order has been made the subject matter of appeal to the CIT(A), the said order can not be revised by the Commissioner u/s. 264 of the I.T. Act." But as per Section 264(4)(a) the CIT can entertain those petitions where the right of appeal has been waived. On the basis of Revision Petition filed by the Company on 05.07.2000, who has rejected the petition u/s. 264(4)(C) of the IT Act as the subject matter of the appeal to the CIT(A) had been made by the appellant. The appellant's submission dated 01.03.2001 was considered by the CIT-III, Ahmadabad, who has confirmed the order of the A.O. in regarding addition made on account of development charges project, namely, "Elegance", consultancy charges, disallowance of legal and professional expenses, compensation expenses, disallowance of hire charges, paper copier and water cooler and motor car expenses, vide order dated 22.01.2002. The appellant had paid tax and A.O. had given credit of tax vide rectification order dated 02.03.2012 (page no.6 of paper book), passed by the I.T.O., Ward 5(2), Ahmad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only directory. When the defect in the appeal, being the non payment of such tax is removed, the earlier defective appeal becomes valid. Once we call an appeal as valid, it is implicit that it is not time-barred. It implies that all the consequences which follow on the removal of defect are that the validity is attached to the appeal from the date when it was originally filed and not when the defect is removed." The Hon'ble Karnataka High Court in case of D. Komalakshi v. Dy. Commissioner of Income Tax - [2007] 162 Taxman 16 (Kar), had allowed four weeks time to the appellant to pay the tax where ITAT dismissed the appeal for non payment of tax. He further relied in case of M.L. Kurian v. Kunnamkulam Municipality, AIR 1998 Ker 5, 6; M. Madhvan Nair Jayasree v. Manjerri Municipality, AIR 1999 Ker. 322, 323, wherein it was held that if the appeal is decided non maintainable either on the ground of limitation or on the ground of non-deposit of tax, should give the notice of being heard to explain his case. He further drawn our attention in case of CIT v. D. Laxminarayanapathi, 250 ITR 187, (Madras High Court), it was held as under: "Held, that the assessee, notwithstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers and Developers [(2008) 114 ITD 147], further held as under: "In the meantime, the assessee paid the taxes on the undisclosed income shown in the return and filed an appeal before the Commissioner (Appeals), for the second time, on 9- 2-2004 with an application for condonation of delay, but the Commissioner (Appeals) refused to condone the delay and dismissed the appeal, vide his order dated 31-8-2004. That order of the Commissioner (Appeals) could not be sustained because when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred". He further relied in case of Manmala Exhibitors vs. CIT & Others, 257 ITR 563, CIT vs. D. Laksminarayanapathi, 250 ITR 187, Kadri Mills (Coimbatore) Ltd. vs. CIT, 243 ITR 861, Radhe Shyam vs. CIT, 146 ITR 374 (All.), Chiranjilal Daga vs. CIT, 113 ITR 363 (Mad.), Krishna Flour Mills Ltd. vs. CIT, 55 ITR 259 (Mysore) & A.V. Sreenivasalu Naidu vs. CIT, 16 ITR 341 (Mad.). He further relied on Co-ordinate Bench, Ahmadabad decision in case of J.K. Chaturvedi v. ACIT [2004] 3 SOT 456 (Ahd.), wherein non compliance of Section 249(4) is h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the CIT(A) wherein the appeal of the assessee has been dismissed considering the same as infructuous, wherein the ground of appeal itself the Appellant Company has relied upon the judgment of Mumbai Bench of ITAT in case of Bhumiraj Construction (Supra) and claimed that in view of the facts of the case, CIT(A) ought to have revived the original appeal and decided the same on merits. In view of the facts of the case as well as the legal position having paid the tax due as per the return of income, the appeal of the Appellant Company requires to be revived. The Appellant Company has preferred appeal before the CIT(A) under section 249. It is an undisputed fact that when appeals before CTT(A) was filed on 5/4/1999 against assessment under section. 143(3) dated 26/2/1999, the tax as per return of income was not paid. But self assessment tax of Rs. 58,87,848/- had been paid by 25.05.2011 as per evidences relating to payment of tax placed on page Nos. 8 to 10 of the Paper Book filed by the Appellant Company and further as per order under section 154 dated 2/3/2012 passed by the A.O. giving the credit for the payment of various instalments which has been paid against the tax due for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income filed 31/7/2000 Appeal before CIT(A) 2/8/2000 Petition under section 264 2/2/2001 264 rejected by CIT 5/2/2002 CIT(A) passed order considering the appeal as infructuous under section 249(4)(a) 28/2/2002 Another petition under section 264 filed 25/3/2003 CIT rejected petition under section 264 9/2/2004 Tax on declared income has been paid 9/2/2004) Fresh appeal filed before CIT(A 31/8/2004 CIT(A) rejected the appeal. Against said rejection of the order of CIT(A) on 31/8/2004, the matter was carried before the Pune Bench of ITAT wherein it has been held as under: "To conclude the petition filed by the assessee under section 264 on 2-8-2000 could not be acted upon by the Commissioner because of the bar imposed by section 264(4), as an appeal filed by the assessee before Commissioner (Appeals) on 31-7-2000 was pending. The appeal pending before the Commissioner (Appeals) was dismissed because of non-compliance with section 249(4)(a). The assessee filed before the Commissioner another petition under section 264 on 28/2/2002 which was nothing but an infructuous exercise. The assessee, later, complied with section 249(4)(a) and filed a fresh appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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